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Russia's oil output will be reduced by another million barrels a day over the next week, after its oil exports have been limited due to contamination issues, according to Reuters.
Contaminated crude oil was transported through Transneft's Druzhba pipeline, forcing the operator to ask Russian oil producers to request a reduction in volumes, a 10% reduction.
The question of contamination – which, according to Transneft, was deliberate – has been a headache for Russia, but European refineries are suffering the most, and have pushed Poland, the Czech Republic and Hungary to release 8 million barrels of oil reserves to conserve their reserves. refineries, and comes at a time when the market is already worried about tightening supplies as crude oil production in Iran and Venezuela decreases.
Russia's oil output had already fallen in April to 11.23 million barrels a day, although levels remained above its agreed production quota of 11.191 billion bpd with OPEC. Russia has hinted in the past month that it may be afraid to extend oil quotas beyond June, although it has not yet cut production to these levels.
Saudi Arabia is committed to meeting the needs of the market in the event of a shortage, but Saudi Arabia was referring to the losses in production recorded in Venezuela and Iran – not Russia.
Transneft is expected to largely resume oil flows over the next two weeks, but it may take some time to repair refinery equipment damaged by corrosive contaminants in the crude oil.
A criminal investigation is underway to locate the source of contaminated crude oil. The first clean oil has arrived in Belarus today since complaints of contamination have been formulated.
By Julianne Geiger for Oilprice.com
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